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unaiHA 


PROPOSED  SOLUTIONS 


OF  THE 


RAILWAY  RATE 
PROBLEM 


A Paper  Presented  at  the  Fifty-ninth  Annual  Meeting  of  the 
American  Association  for  the  Advancement  of  Science, 
before  the  Section  on  Social  and  Economic  Science,  at 
New  Orleans,  Louisiana,  on  December  30,  1905. 


By  H.  T.  NEWCOMB 


Of  the  Bar  of  the  District  of  Columbia, 

Author  of  "Railway  Economics,”  "The  Postal  Deficit,” 

"Some  Consequences  of  the  Trust  Movement,”  "Some  Recent 
Phases  of  the  Labor  Problem,”  "Municipal  Ownership,”  "The  Conservative; 
Victory  in  Cleveland,”  "The  Theory  and  Practice  of  the  Spoils  System,”  "Who 
Own  the  Railroads?”  "The  Work  of  the  Interstate  Commerce  Commis- 
sion,” "The  Federal  Courts  and  the  Orders  of  the  Interstate 
Commerce  Commission,”  "The  Facts  about  Railroad 
Rates,”  Etc.,  Etc. 


GEO.  E.  HOWARD,  PRINTER 
WASHINGTON,  D.  C. 

1906 


ItHflARY 

UKIVEF3ITV  Of  ILLINOIS 

URBANA 


PROPOSED  SOLUTIONS 

OF  THE 


RAILWAY  RATE 
PROBLEM 

A Paper  Presented  at  the  Fifty-ninth  Annual  Meeting  of  the 
American  Association  for  the  Advancement  of  Science, 
before  the  Section  on  Social  and  Economic  Science,  at 
New  Orleans,  Louisiana,  on  December  30,  1905. 


By  H.  T.  NEWCOMB 

Of  the  Bar  of  the  District  of  Columbia. 

Author  of  "Railway  Economics,”  "The  Postal  Deficit,” 

"Some  Consequences  of  the  Trust  Movement,”  "Some  Recent 
Phases  of  the  Labor  Problem,”  "Municipal  Ownership,”  "The  Conservative; 
Victory  in  Cleveland,”  "The  Theory  and  Practice  of  the  Spoils  System,”  "Who 
Own  the  Railroads?”  "The  Work  of  the  In.erstate  Commerce  Commis- 
sion,” "The  Federal  Courts  and  ihe  Orders  of  the  Interstate 
Commerce  Commiss  on,”  "The  Facts  about  Railroad 
Rates,”  Etc.,  Etc. 


GEO.  E.  HOWARD,  PRINTER 
WASHINGTON,  D.  C. 

1906 


Contents 

Pages 


Political  Rate-Making  Not  an  Antidote  for  Rebates 5 

Regulation  of  Tariff  Rates 6 

Effective  Laws  Now  Exist 6 

Legislative  Proposals  Classified 8 

An  Appointive  Deputy-Legislature 9 

Many  Are  Misled io 

It  is  General  Political  Rate-Making n 

A Powerful  Commission  Denies  Its  Power 12 

Railways  Do  Not  Trifle  with  Public  Authority 14 

The  Judicial  Power  Ample 16 

What  a Deputy-Legislature  Could  Do 21 

Shall  America  Become  a Bureaucracy? 22 

Sidelights  on  the  Present  Commission’s  Theory 24 

Results  of  Law-Made  Rates., 26 

Would  Throttle  Competition 29 


2 

/si 

Va  ■ 


Digitized  by  the  Internet  Archive 
in  2016 


https://archive.org/details/proposedsolutionOOnewc 


Proposed  Solutions  of  the  Rail- 
way Rate  Problem 


By  H.  T.  Newcomb 


Political  Rate-Making  Not  an  Antidote  For  Rebates. 

In  order  to  clear  the  ground  for  discussion  it  is  necessary 
to  observe  that  the  legislation  discussed  in  this  paper  has 
nothing  to  do  with  rebates.  Any  system  of  rate  regulation 
must,  as  its  first  step,  require  the  publication  of  rates  and 
attempt  to  enforce  the  rates  published.  When  this  has  been 
done  any  rebate;  that  is,  any  concession  which  amounts  to 
carrying  the  goods  of  any  shipper  for  less  than  the  tariff 
rate  on  those  goods,  is  an  offense  against  the  state  because  it 
deprives  the  initial  step  in  the  regulative  process  of  its 
efficacy.  For  this  reason,  even  more  than  on  account  of  the 
grievous  wrong  to  individuals  in  which  they  may  result, 
rebates  should  not  be  tolerated,  and  any  device  by  which 
they  are  accomplished  should  be  rigorously  repressed.  Over 
this  there  is  no  controversy.  Write  the  most  drastic  law 
practicable  and  you  have  but  to  convince  that  it  is  workable 
and  there  will  be  no  opposition  to  its  enactment. 


5 


6 


PROPOSED  SOLUTIONS 


The  Regulation  of  Tariff  Rates 
The  purposes  of  public  regulation  are  not  exhausted  by  the 
publication  and  enforcement  of  a schedule  of  rates.  There 
may  be  excessive  rates  or  unjust  discriminations  among  the 
scheduled  rates,  and  it  is  urged  that  prompt  and  adequate 
relief  therefrom  can  not  always  be  obtained  by  negotiation 
between  the  shippers  and  the  carriers.  The  Common  Law 
gives  sanction  to  this  by  treating  the  business  of  common 
carriers  as  one  charged  with  a public  interest  and  giving 
access  to  the  courts  to  any  one  to  whom  service  at  a reason- 
able price  is  denied.  And,  with  regard  to  railways,  both  in 
England  and  America  the  makers  of  statutes  have  added  to 
the  judicial  authority  to  accord  relief,  and  have  provided 
other  more  or  less  comprehensive  and  effective  means  for 
compelling  changes  in  the  rates  and  rate  adjustments  an- 
nounced in  the  schedule. 

Effective  Laws  Now  Exist 
The  Congress  of  the  United  States  has  never  gone  further 
in  the  direction  indicated  than  to  strengthen  the  executive 
power  of  investigation  and  prosecution  and  to  extend  and 
expedite  the  judicial  power.  The  Interstate  Commerce  Com- 
mission is  an  investigating  and  prosecuting  body,  and  it  is 
also  quasi- judicial  in  that,  in  matters  of  interstate  railway 
commerce,  it  is,  in  effect,  the  general  referee  for  all  the  cir- 
cuit courts  of  the  United  States.  (See  Kentucky  and  In- 
diana Bridge  Company  v.  Louisville  and  Nashville,  37  Fed. 


EFFECTIVE  LAWS  NOW  EXIST 


7 


Rep.  567.)  It  has  power  upon  investigation  and  hearing  to 
order  any  carrier  to  cease  and  desist  from  any  violation  of 
the  law  and  many  of  its  orders  are  promptly  and  voluntarily 
obeyed,  but  they  have  no  compulsory  force  until  incorporated 
in  decrees  of  the  Federal  Courts.  If  they  are  disobeyed  the 
Commission  may  appear  itself  as  a complainant  or  prosecutor 
asking  the  proper  court  to  issue  a decree  of  enforcement 
and  in  this  proceeding  the  court  can  inquire  only  as  to  the 
lawfulness  of  the  order  and  the  fact  of  disobedience.  In 
these  cases  the  courts  have  no  authority  to  modify  or  amend 
the  Commission's  order,  but  if  it  is  lawful  must  compel 
obedience  by  issuing  the  proper  process,  while  the  Com- 
mission has  no  standing  as  a complainant  except  to  ask  for 
such  enforcement  and,  therefore,  can  not  plead  the  general 
equities  involved  in  the  case  between  the  shipper  and  the 
carrier  in  support  of  any  different  form  of  relief  than  that 
provided  in  the  order.  Under  the  Elkins  law,  however,  the 
Commission  can  go  at  once  into  court,  without  having  issued 
a formal  order  or  conducted  a formal  investigation,  when- 
ever it  has  “reasonable  ground  for  belief"  that  a carrier  is 
guilty  of  any  “discrimination  forbidden  by  law"  and  may 
plead  the  general  equities  of  the  situation  in  behalf  of  what- 
ever form  of  relief  the  court  may  regard  as  adequate  and 
proper.  And  whatever  relief  the  court  considers  that  justice 
demands,  the  court  has  power  to  grant.  This  process  is 
broad  and  comprehensive,  prompt  and  efficacious;  it  is  un- 
fortunate that  the  Interstate  Commerce  Commission  has  not 
seen  fit  to  make  use  of  it.  So  much  for  existing  law. 


8 


PROPOSED  SOLUTIONS 


Legislative  Proposals  Classified 

Many  proposals  for  new  legislation  are  now  before  the 
Congress  and  the  people.  This  paper  has  been  prepared 
especially  to  point  out  certain  broad  principles  in  connec- 
tion with  them.  The  measures  proposed  fall  plainly  into 
two  classes.  There  are  proposals  which  contemplate — 

A.  A single  act  of  legislation  leaving  the  enforcement 
of  the  law  to  the  ordinary  executive  and  judicial 
machinery  supplemented,  as  at  present,  by  the  In- 
terstate Commerce  Commission,  and, 

B.  Successive  acts  of  legislation  each  specially  adapt- 
ed to  the  conditions  peculiar  to  a particular  case. 

The  Foraker  bill  (S.  285)  belongs  to  Class  A.  as  does, 
also,  the  plan  devised  and  so  ably  advocated  by  Judge 
Peter  S.  Grosscup.  Its  principle  is  that  Con- 
gress should  set  up  the  standards  of  obligation 
to  which  the  carriers  must  conform,  but  that  when 
they  are  charged  with  violating  those  standards  the  carriers 
should  have  the  same  right  as  every  one  else  charged  with 
an  offense  against  the  law ; that  is,  the  right  to  defend  them- 
selves and  if  possible  to  establish  their  innocence  of  the 
charge  in  a court  of  justice.  It  also  recognizes  the  fact  that 
unjust  discrimination  and  excessive  charges  in  railway  serv- 
ice are  public  offenses,  and  provides  that  the  cost  of  prose- 
cuting alleged  violations  of  the  law  shall  be  borne  by  the 
Government.  If  this  measure  should  be  adopted  the  Com- 


AN  APPOINTIVE  DEPUTY-LEGISLATURE 


9 


mission  would  make  such  an  examination  of  each  complaint 
received  as  should  be  necessary  to  convince  itself  whether 
there  was  “reasonable  ground  for  belief”  that  the  law  was 
being  or  had  been  violated.  There  would  be,  before  the 
Commission,  no  formal  pleadings  or  hearings,  no  arguments 
by  counsel,  no  elaborate,  tedious  and  time-destroying  proc- 
esses of  any  kind.  If  a prima  facie  case  was  made  out,  the 
Commission  would  complain  to  a Circuit  Court  of  the  United 
States  sitting  in  equity  and  would  ask  for  such  relief  as  the 
circumstances  demanded.  And  the  order  of  the  court  would 
grant  such  relief ; for  that  purpose  controlling,  if  necessary 
or  desirable,  future  rates  and  rate  adjustments. 

An  Appointive  Deputy-Legislature 

The  idea  that  there  must  be  a special  act  of  legislation  to 
meet  every  case  is  applied  in  the  bill  prepared  by  the  Inter- 
state Commerce  Commission  (printed,  but  not  yet  intro- 
duced), in  the  Dolliver  bill  (S.  2261),  in  the  Tillman  bill 
(S.  1378),  in  the  Hepburn  bill  (H.  R.  10,099), 

and  in  the  Townsend  bill  (H.  R.  4425).  The 
theory  of  these  bills  is  that  the  only  power 

adequate  to  correct  the  abuses  which  exist  is  the 
legislative  power  possessed  by  Congress.  They  hold  that 
Congress  has  power  to  pass  by  statute  a schedule  for  all  the 
railroads  and  covering  every  service  the  railways  render,  but 
they  are  not,  themselves,  willing  that  Congress  should, 
directly,  exercise  this  power.  They  contend,  however,  that 


10 


PROPOSED  SOLUTIONS 


it  ought  to  be  utilized,  fragment  by  fragment,  and  fraction 
by  fraction,  as  cases  which  present  the  conditions  that  appeal 
to  legislative  discretion  from  time  to  time  arise.  But  here 
a difficulty  presents  itself.  Congress  is  not  always  in  session, 
its  burdens  are  manifold  and  heavy,  it  has  no  expert  knowl- 
edge of  rates  or  traffic  conditions  and  no  time  to  acquire  such 
knowledge.  Clearly  Congress  can  no  more  make  a fragment 
of  a schedule  than  it  can  make  an  entire  schedule;  it  can 
not  so  easily  make  a whole  schedule  by  fragments  as  it  could 
make  such  a schedule  at  one  time.  To  meet  this  condition  an 
expedient  has  been  devised  which  involves  a startling  depar- 
ture from  the  ordinary  and  orderly  processes  of  legislation. 
It  is  proposed  to  segregate  a portion  of  the  legislative  discre- 
tion entrusted  to  the  elective  representatives  of  the  people 
and  the  states  and  to  erect  a deputy-legislature  with  mem- 
bers appointed  by  the  President.  That  is  the  Interstate  Com- 
merce Commission  which  is  now  a part  of  the  executive 
branch  of  the  Federal  Government  and  an  adjunct  of  the 
judicial  branch,  is  to  become  a legislative  body,  but  this  new 
and  extra-constitutional  legislature  is  not  to  become,  like  the 
rest  of  the  legislative  machinery  of  the  country,  directly  re- 
sponsible to  its  constituents ; it  is  to  remain  the  creature  of 
the  appointing  power  of  the  Executive.  To  this  length  pro- 
ceeds the  desire  to  substitute  law-made  rates  for  market- 
made  rates. 

Many  Are  Misled 

All  true  Americans  revere  the  Constitution  and,  although 


MANY  ARE  MISLED 


II 


no  sensible  man  wishes  to  make  it  a fetish,  none  would  depart 
from  its  spirit  without  full  consideration  and  ample  cause. 
Yet  it  is  the  proposed  deputy-legislature  which  has  seized 
upon  the  imagination  of  many  of  those  who  have  little  direct 
contact  with  the  railway  system  and  but  meagre  acquaintance 
with  basic  industrial  conditions.  It  is  this  plan  which  is  said 
to  be  favored  by  that  intangible  and  elusive  if  really  existent 
public  sentiment  which  looms  so  large  in  the  eyes  of  some 
legislators  that  it  is  not  yet  certain  that  they  may  not  feel 
impelled  to  an  enactment  which  few  approve,  which  fills 
most  with  feelings  of  distrust  and  alarm.  If  many  Ameri- 
cans have  actually  been  led  to  favor  devolving  important 
* 

legislative  power  upon  an  appointive  body  and  thus  separat- 
ing further  from  the  people  a part  of  that  authority  which 
a Democracy  delegates,  reluctantly  and  only  of  necessity,  to 
its  elected  representatives,  there  must  be  reasons  for  their 
course  somewhat  equal  to  the  extent  of  the  departure  from 
ancient  principles  and  jealously  guarded  rights. 

There  are  such  reasons.  They  are  to  be  found  in : 

A.  A false  conception  of  the  change  proposed ; 

B.  A misunderstanding  of  the  present  situation ; and, 

C.  An  under  estimate  of  the  powers  of  the  Federal 
Courts  of  equity  and  of  the  scope  of  the  authority 
which  can  be  conferred  upon  them. 

It  Is  General  Political  Rate-Making 

It  sounds  so  softly  innocuous,  on  the  part  of  the 


12 


PROPOSED  SOLUTIONS 


Commission,  to  contend  for  the  power  to  “correct 
a rate  upon  complaint  and  after  investigation”  or 
to  “substitute  a reasonable  rate  for  one  found  to  be  un- 
reasonable.” These  are  the  terms  in  which  the  advocates  of 
law-made  rates  describe  the  proposed  substitution  of  legisla- 
tive discretion  for  the  impartial  enforcement  of  statutes  of 
general  application  and  the  transfer  of  that  legislative  dis- 
cretion to  an  appointive  deputy-legislature  unknown  to  the 
Constitution  and  utterly  foreign  and  obnoxious  to  its  spirit. 
Who  would  imagine  from  these  words  that  the  Commission 
rarely  considers  a case  which  involves  but  one  rate,  that 
many  of  its  decisions  have  involved  thousands  of  rates,  that 
it  can  proceed  without  complaint  “on  its  own  motion”  as 
well  as  after  complaint,  that  any  one  can  complain  of  any 
rates  without  showing  the  slightest  pecuniary  interest  in 
them,  or  that  full  power  to  correct  any  violation  of  law  now 
exists?  Yet  these  are  the  facts. 

A Powerful  Commission  Denies  Its  Power. 

While  in  the  orderly  performance  of  its  duties  the  Com- 
mission has  been  settling  thirty-nine  out  of  every  forty  cases 
presented  to  it  and  seventy  per  cent  of  the  orders,  and  sub- 
stantially all  of  the  lawful  orders,  which  it  has  issued  after 
formal  proceedings  have  been  obeyed  without  the  need  of 
recourse  to  the  courts  it  has  been  persistently  claimed  that 
the  Commission  has  no  real  power  and  that  there  exists  no 
adequate  means  of  redress  for  the  shipper  who  is  injured  by 


A POWERFUL  COMMISSION  DENIES  ITS  POWER 


13 


unreasonable  tariff  rates.  Many  such  statements  have  been 
made  by  Mr.  Charles  A.  Prouty,  one  of  the  members  of  the 
present  Commission.  Addressing  a committee  of  the  United 
States  Senate  on  February  20,  1900,  he  said: 

“After  the  decision  of  the  Maximum  Rate  case  in 
1897  this  Commission  had  no  more  power  to  secure  to 
the  vegetable  grower  of  Florida,  or  to  the  cotton  raiser 
of  Texas,  or  to  the  farmer  of  Iowa,  a just  and  reason- 
able rate  than  it  had  to  secure  the  necessary  sunshine 
and  rain  to  ripen  that  man’s  crop.  It  could  intercede 
with  the  railroads  for  the  rate,  and  it  might  intercede 
with  Divine  Providence  for  the  rain,  but  the  power  was 
exactly  as  great  in  the  one  case  as  in  the  other.” 

It  was  recently  suggested  in  the  House  of  Representatives 
that  an  orator  can  not  be  “hampered  by  such  commonplace 
things  as  facts,  but  must,  like  a poet,  be  permitted,  on  occa- 
sions, to  give  his  imagination  full  swing.”  Perhaps  the  same 
rule  applies  to  a Commissioner  of  interstate  commerce.  At 
any  rate  the  quoted  statement  of  Mr.  Prouty  is  contradicted 
by  the  records  of  the  Commission  of  which  he  is  a member 
and  by  those  of  the  courts,  to  which  he  has  access.  The  law 
provides  ample  means,  in  the  language  of  the  Supreme 
Court,  “to  enable  the  Commission  to  enforce  any  order  it  is 
authorized  to  make,”  and  it  is  authorized  to  condemn  any 
rate  or  rates  which,  under  the  statute,  are  unreasonable  in 
themselves  or  in  their  relations  to  other  rates  and  to  order 
the  carriers  to  cease  and  desist  from  collecting  them.  Yet 


14 


PROPOSED  SOLUTIONS 


the  Commission  itself  has  declared  in  an  Annual  Report 
(1897)  that — 

“*  * * under  the  Interstate  Commerce  act,  as  now 

construed  by  the  Supreme  Court,  the  carrier  is  given 
the  right  to  establish  and  change  its  rates  independent 
of  the  judgment  of  the  Commission  and  independent 
of  the  action  and  judgment  of  the  court  or  other 
tribunal;  * * * the  right  to  establish,  demand  and 

receive  unreasonable  and  unjust  charges  is  not  pro- 
hibited ; and  * * * in  respect  to  the  charges  which 

may  be  demanded  and  received  for  any  transportation 
service  the  carriers  are  made  judges  in  their  own  cases 
as  to  what  is  reasonable  and  just.” 

It  is  not  strange  that  statements  of  this  sort  emanating 
from  presumably  authoritative  sources,  have  obscured  the 
public  vision  to  the  fact  that  even  while  they  were  being 
made  the  Commission  was  quietly  settling  many  rate  con- 
troversies, and  that  many  orders  issued  under  a theory  abso- 
lutely at  variance  with  the  sentences  quoted  have  been  obeyed 
by  the  carriers,  while  still  others  have  been  enforced  by  the 
courts. 

Railways  Do  Not  Trifle  With  Public  Authority. 

Public  sentiment  has  been  further  misled  by  repeated 
statements,  of  which  the  following  is  typical : 

“Take  a rate  of  twenty  cents  on  hay  from  Saint 
Louis  and  assume  the  Commission  has  found  it  to  be 


RAILWAYS  DO  NOT  TRIFLE  WITH  PUBLIC  AUTHORITY  1 5 


unreasonable  * * * if  required  to  obey  it  the  car- 

rier need  only  reduce,  say,  one  cent.  Now  assume  that 
ten  cents  is  a reasonable  rate.  It  would  require  under 
that  procedure  ten  suits  in  the  courts  of  the  United 
States  * * * to  secure  the  enforcement  of  a reason- 
able rate.” 

A similar  statement  appeared  in  the  Annual  Report  of  the 
Commission  for  1904,  but  the  testimony  of  the  members  of 
the  Commission  before  the  Senate  Committee  on  Interstate 
Commerce  during  June,  1905,  shows  that  in  only  two  in- 
stances has  the  reduction  been  less  than  that  directed  by  the 
Commission,  and  in  those  cases  it  appears  that  very  sub- 
stantial reductions  were  made.  A distinguished  member  of 
the  Commission  truly  and  wisely  said: 

“The  carrier  can  not  afford  to  trifle  with  public 
authority.  It  can  not  afford  to  do  a trivial  and  evasive 
thing.  I must  honestly  say  that  I do  not  believe  any 
railroad  manager  would  make,  under  such  a theory  as 
that,  a nominal  change  in  a rate  for  the  purpose  of 
technically  complying  with  an  order  to  cease  and  desist.” 

Let  the  facts  be  plainly  stated.  The  Commission  is  a 
Federal  agency  of  high  authority  and  the  law  under  which 
it  exists  is  a broad  and  comprehensive  statute  which  has 
strongly  influenced  the  economic  life  of  America  since  its 
enactment  in  1887.  It  forbids  every  unreasonable  interstate 
railway  rate  and  every  undue  discrimination  among  rates 
and  the  Commission  has  the  right  to  condemn  any  unlawful 


i6 


PROPOSED  SOLUTIONS 


rate  or  practice.  Much  of  the  work  of  the  Commission  is 
accomplished  through  its  agencies  for  publicity  and  by 
conciliation;  at  least  eighty  per  cent  of  the  complaints  it 
receives  are  settled  by  its  informal  and  mediatory  action; 
seventy  per  cent  of  its  formal  orders  are  voluntarily  obeyed. 
In  nearly  nineteen  years  only  forty-seven  cases  of  dis- 
obedience to  its  orders  have  been  presented  to  the  courts, 
and  of  the  thirty-five  final  decisions  rendered  all  but  four 
have  been  that  the  order  disobeyed  was  unlawful.  In  four 
cases  the  orders  have  been  enforced  by  the  courts,  thus 
proving  that  the  power  exists  when  the  Commission  acts 
lawfully.  In  addition  the  Elkins  law  has  provided  a prompt 
and  effective  remedy  for  unjust  discrimination.  I speak  both 
as  a student  of  commerce  and  industry  and  a lawyer  when 
I assert  that  there  is  no  genuine  instance  of  injustice  in 
interstate  railway  rates  which  can  not  be  remedied  under 
the  present  law,  and  that  the  existing  remedies  can  be  applied 
as  promptly  as  those  which  Government  provides  or  can 
provide  for  wrong  of  any  sort  when  the  interests  concerned 
are  of  great  magnitude. 

The  Judicial  Power  Ample. 

Undoubtedly  many  advocates  of  law-made  rates  favor  a 
deputy-legislature  because  they  believe  that  the  judicial 
power  can  not  be  used  to  control  a future  rate ; in  other 
words,  that  the  delegation  of  law-making  power  to  an  ap- 
pointive body  is  the  only  way  in  which  the  Federal  govern- 


THE  JUDICIAL  POWER  AMPLE 


17 


ment  can  effectively  exercise  authority  over  future  rates  and 
their  adjustments.  This  conclusion  rests  wholly  upon  the 
unstable  foundation  of  a bit  of  obiter  dictum  in  the  Maxi- 
mum Rate  case  (167  U.  S.  479).  The  question  before  the 
Supreme  Court  was  whether  the  Congress  had  granted  to 
the  Commission  the  power  to  prescribe  future  rates,  not 
whether  it  might  have  granted  such  power  to  the  Commis- 
sion, much  less  whether  it  could  authorize  its  exercise  by  a 
court.  In  the  course  of  its  opinion,  while  showing  that  the 
power  in  question  had  not  been  granted  to  the  Commission, 
the  court  said: 

“It  is  one  thing  to  inquire  whether  the  rates  which 
have  been  charged  are  reasonable — that  is  a judicial  act; 
but  an  entirely  different  thing  to  prescribe  rates  which 
shall  be  charged  in  the  future — that  is  a legislative  act.” 

Prior  to  this  utterance  the  Commission  did  not  regard  the 
control  of  future  rates  as  essentially  legislative,  for  it  had 
never  claimed  to  be  a deputy-legislature  but  had  attempted 
to  exercise  the  power  on  the  theory  that  it  was  a judicial 
power,  the  preliminary  exercise  of  which  was  within  its 
function  as  the  general  referee  of  the  Federal  Courts  of 
Equity.  No  one  to-day  believes  that  the  courts  can  not 
exercise  the  power  in  question,  unless  his  opinion  rests  upon 
the  slender  basis  indicated. 

But  the  fact  is  that  the  courts  do  possess  this  power  under 
the  present  law,  and  have  exercised  it  in  interstate  commerce 


i8 


PROPOSED  SOLUTIONS 


cases.  In  the  Wichita  case  (United  States  v.  Missouri  Pa- 
cific, 189  U.  S.  274)  the  Circuit  Court  decided  that  it  had 
jurisdiction  to  hear  a complaint  that  the  adjustment  of  the 
tariff  rates  as  between  St.  Louis  and  Wichita,  on  the  one 
hand,  and  St.  Louis  and  Omaha,  on  the  other,  was  such  as 
unjustly  to  discriminate  against  persons  shipping  between 
St.  Louis  and  Wichita.  And  it  held  this  even  though  the 
Commission,  at  whose  relation  the  suit  was  instituted,  had 
made  no  formal  investigation,  had  given  the  parties  no  op- 
portunity to  be  heard  and  had  issued  no  formal  order.  The 
only  possible  relief  in  this  case  was  an  injunction  against 
future  discrimination,  and  the  decision  of  the  Supreme  Court 
in  favor  of  the  jurisdiction  of  the  Circuit  Court  is  equivalent 
to  a decision  that  the  power  to  give  that  relief  lay  with  the 
court.  This  is  not  the  place  to  present  a brief  of  decisions 
which  sustain  the  view  that  the  judicial  power  is  adequate 
to  control  future  rates,  and  this  part  of  the  discussion  will 
be  closed  with  a single  suggestion.  The  present  orders  of 
the  Commission  have  only  the  force  of  recommendations 
until  they  are  incorporated  into  judicial  decrees.  After  that, 
those  who  disobey  them  have  disobeyed  the  courts  and  are  in 
contempt  of  the  courts,  not  of  the  Commission.  Now,  cer- 
tainly, the  mere  issuance  of  an  order  by  the  Commission  can 
not  enlarge  the  powers  of  a Federal  Court,  and  a fortiori 
such  a recommendation  can  not  enlarge  those  powers  more 
than  they  can  be  extended  by  a statute  duly  enacted  by  the 
Congress.  But  substantially  without  exception  the  orders 


THE  JUDICIAL  POWER  AMPLE 


19 


of  the  Commission  do  control  future  rates,  and  when  effec- 
tively incorporated  in  decrees  in  equity  those  decrees  control 
future  rates.  Although  the  orders  of  the  Commission  have 
rarely  met  with  judicial  approval  just  enough  of  them  have 
escaped  condemnation  to  prove  conclusively  that  they  can 
be  incorporated  in  such  decrees  and  that  the  fact  that  they 
do  control  future  rates  is  no  obstacle  to  such  incorporation. 
The  attention  of  the  student  who  wishes  to  pursue  this  sub- 
ject further  is  invited  to  Janvrin  v.  Revere  Water  Company 
(174  Mass.  514,  47  L.  R.  A.  319)  decided  by  Mr.  Justice 
Holmes,  now  of  the  Supreme  Court  of  the  United  States. 
This  case  arose  under  a statute  requiring  water  companies  to 
supply  their  patrons  at  reasonable  rates  and  authorizing  the 
court  to  establish  maximum  rates  on  complaint.  It  was 
objected  that  this  imposed  a non- judicial  duty,  but  the  court 
sustained  the  statute,  saying,  inter  alia: 

“It  calls  on  us  to  fix  the  extent  of  actually  existing 
rights.  With  regard  to  such  rights  judicial  determina- 
tions are  not  confined  to  the  past.  If  it  legitimately 
might  be  left  to  this  court  to  decide  whether  a bill 
for  water  furnished  was  reasonable,  and  if  not,  to 
cut  it  down  to  a reasonable  sum,  it  equally  may  be  left 
to  the  court  to  enjoin  a company  from  charging  more 
than  a reasonable  sum  in  the  immediate  future.” 

Clearly  the  same  reasoning  is  applicable  to  interstate  rail- 
way charges.  If  any  doubt  exists  on  this  question  there  is 
an  indirect  method  by  which  the  judicial  power  could  be  so 


20 


PROPOSED  SOLUTIONS 


utilized  as  to  avoid  any  excuse  for  the  creation  of  a deputy- 
legislature.  Congress  might  authorize  complaints  in  the  name 
and  at  the  expense  of  the  United  States  in  cases  of  alleged 
excessive  or  unjustly  discriminatory  charges  and  might  re- 
quire the  court  deciding  such  cases  to  find  as  a fact  in  each 
case  what  rate  or  rates  would  have  been  reasonable  under  the 
conditions  and  circumstances  disclosed  and  to  incorporate 
such  finding  in  a written  opinion.  Then  there  might  be  en- 
acted a general  statute  acting  upon  every  such  finding  and 
making  the  rates  thus  approved,  not  by  virtue  of  the  courts’ 
decrees  but  by  force  of  a law  of  the  United  States,  conclusive 
standards  of  reasonableness  during  the  continuance  of  sub- 
stantially similar  circumstances  and  conditions.  No  sane  per- 
son contends  that  longer  force  than  this  ought  to  be  given  to 
the  action  of  any  governmental  agency.  Commissioner 
Prouty,  the  extremest  applicant  for  legislative  authority,  told 
the  Senate  Committee  on  Interstate  Commerce  during  the 
recent  hearings  (Vol.  IV.  p.  2885)  that  he  had  :• 

“*  * * always  insisted  * * * that  the  rate  fixed  by 
the  Commission  should  be  observed  for  a certain  length 
of  time  and  should  then  cease  to  be  obligatory  on  the 
carrier.” 

And  he  added  that  in  his  opinion  it  would  “work  out  all 
right”  if  the  carrier  were  merely  obliged  to  charge  the  Com- 
mission’s rate  for  a single  day  and  were  then  at  liberty  to 
make  a change  if  in  the  opinion  of  its  officers  “conditions  had 
changed  so  as  to  require  another  rate.” 


WHAT  A DEPUTY-LEGISLATURE  COULD  DO 


21 


What  a Deputy- Legislature  Could  Do 

I have  shown  that  reasonable  rates  can  be  enforced 
through  the  orderly  judicial  processes.  Why  do  any  of  those 
who  are  not  misled  by  the  contrary  opinion  still  insist  that 
the  defendants  in  a particular  class  of  controversies  shall  be 
compelled  to  submit  to  the  judgment  of  a tribunal  differing 
in  character  and  in  methods  of  procedure  from  the  judicial 
tribunals  created  under  the  Constitution  and  in  conformity 
with  the  practice  of  all  English-speaking  peoples?  Why  do 
they  still  demand  their  deputy-legislature? 

It  is  not  necessary  to  go  far  in  search  of  an  answer.  Courts 
enforce  laws;  legislatures  enact  political  and  social  theories 
into  laws.  This  distribution  of  governmental  powers,  estab- 
lished to  guard  the  freedom  of  the  governed,  is  a 
chief  attainment  of  that  evolution  by  which  society 
has  risen  from  despotism.  The  inquiry  of  the 
court  is  whether  a law  has  been  violated ; the 
inquiry  of  a legislature  is  whether  a new  law  shall  be  made. 
For  the  inquiry  of  the  former  there  are  prescribed  rules  of 
evidence,  and  formal  but  not  necessarily  elaborate  or  lengthy 
methods  of  procedure;  the  latter  may  investigate  or  not  as 
its  majority  prefers  and  if  it  investigates  at  all  may  hear 
testimony  that  would  be  rejected  by  a court  and  need  hear  no 
more  than  it  chooses.  Those  who  still  adhere  to  a demand 
for  a deputy-legislature  want  to  enforce  through  it  certain 
“theories  of  social  progress”  which  Congress,  the  directly 
responsible  legislature,  is  not  inclined  to  enact  and  which, 
therefore,  are  not  enforceable  by  the  courts.  Let  the  Com- 


22 


PROPOSED  SOLUTIONS 


mission  be  called  as  a witness.  In  its  Annual  Report  for  1895 
the  Commission  gravely  announced  that: 

“No  one  who  understands  the  intricacies  of  trans- 
portation would  care  to  assert  that  the  determination 
of  a just  rate,  or  the  decision  as  to  what  constitutes  dis- 
crimination, is  an  easy  task.  To  some  extent  the  prin- 
ciples upon  which  taxation  rests  must  be  allowed  in 
fixing  a just  rate;  to  some  extent  the  result  of  a rate 
upon  the  development  of  industry  must  be  taken 
into  account  in  all  decisions  which  the  Commission  is 
called  upon  to  make;  to  some  extent  every  question  of 
transportation  involves  moral  and  social  considerations 
so  that  a just  rate  can  not  be  determined  independently 
of  the  theory  of  social  progress.” 

Shall  America  Become  a Bureaucracy? 

There  are  many  theories  of  social  progress.  Almost  every 
one  has  and  every  one  ought  to  have  such  a theory.  But 
there  are  also  Constitutional  methods  for  putting  in  lawful 
force  those  theories  of  social  progress  which  have  the  ap- 
proval of  the  majority  of  the  people.  If  these  Constitutional 
methods  are  not  followed,  if  they  are  broken  in  letter  or  in 
spirit,  there  is  danger,  almost  amounting  to  certainty,  that 
some  theories  will  be  enforced  which  have  not  the  approval 
of  the  majority  and  that  will  not  promote  the  general  wel- 
fare. I do  not  mean  that  the  deputy-legislature  would  con- 
sciously act  partially  or  unjustly  but  I do  mean  that  we  would 
be  safer  only  in  degree,  not  in  principle,  in  entrusting  law- 


SHALL  AMERICA  BECOME  A BUREAUCRACY? 


23 


making  power  to  a commission  of  five  or  seven  men  than 
the  Russians  have  been  in  leaving  it  to  a Czar.  Indeed  all 
autocrats  are  forced  by  the  physical  limits  of  individual 
capacity  to  act  through  bureaus  and  a modern  autocracy  is 
always,  in  fact,  a bureaucracy. 

Few  laws  are  of  greater  importance  than  those  which  this 
deputy-legislature  would  have  power  to  enact.  The  power 
to  make  freight  rates  and  to  adjust  them  relatively  to  one 
another  is  the  power  to  bind  or  to  loose  industry,  to  enrich 
or  to  impoverish  both  labor  and  capital,  to  build  up  or  to 
tear  down  communities  and  commerce.  Where  wheat  shall 
be  ground  into  flour  is  principally  a question  of  the  relation 
between  the  rates  on  grain  and  on  flour.  The  trend  of  ex- 
port commerce  is  fixed  by  the  relations  among  the  rates  from 
the  primary  sources  of  supply  to  the  several  ports.  Whether 
a particular  homebuilder  shall  use  the  lumber  of  Oregon 
or  Michigan  or  Arkansas  or  Georgia  is  more  than  likely 
to  be  determined  by  the  relative  railway  rates.  And  so  on 
throughout  the  entire  list.  But  the  railways  can  not  exercise 
the  tremendous  power  they  apparently  possess  except  to 
register  the  rates  required  by  natural  conditions.  They  are 
held  in  check  by  the  needs  of  their  patrons,  their  own  de- 
pendence upon  plentiful  traffic  and  the  necessity  of  profits. 
It  is  only  when  the  Government  steps  in  and  abolishes  the 
test  of  pecuniary  success  that  arbitrary  rate-making  begins. 
The  commercial  restraints  which  control  every  business  en- 
terprise would  in  no  way  restrain  a deputy-legislature.  Such 


24 


PROPOSED  SOLUTIONS 


a body  would  have  complete  dominion  over  the  industries 
of  America  and  Americans.  It  could  deal  out  prosperity  or 
penury  at  will ; it  could  give  here  and  withhold  there  subject 
only  to  the  restraints  imposed  by  the  patience  of  the  people. 

Sidelights  on  the  Present  Commission's  Theory 

We  are  not  without  information  as  to  the  direction  in 
which  the  Commission  would  move  in  substituting  a theory 
of  social  progress  for  the  normal  results  of  industrial  com- 
petition. The  Commission’s  ideals  as  to  its  policy  were  an- 
nounced in  an  annual  report  as  follows : 

“To  give  each  community  the  rightful  benefits  of 
location,  to  keep  different  commodities  on  an  equal  foot- 
ing, so  that  each  shall  circulate  freely  and  in  natural 
volume,  and  to  prescribe  schedule  rates  which  shall  be 
reasonable,  just,  to  both  shipper  and  carrier,  is  a task 
of  vast  magnitude  and  importance.  In  the  performance 
of  that  task  lies  the  great  and  permanent  work  of  public 
regulation.” 

I wish  some  one  would  interrupt  me  long  enough  to  ex- 
plain to  me  how  I may  hereafter  distinguish  between  the 
“rightful”  and  the  wrongful  benefits  of  location,  how  I may 
know  when  cotton  moving  southward  to  New  Orleans  is 
“on  an  equal  footing”  with  cotton-ties  moving  northward, 
what  is  the  “natural  volume”  in  which  bananas  should  move 
through  this  port  to  Chicago  and  that  in  which  flour  should 
come  here  from  Texas. 


SIDELIGHTS  ON  THE  PRESENT  COMMISSION^  THEORY  25 

From  the  University  of  Harvard  there  came  to  Wash- 
ington during  the  recent  investigation  an  instructor 
in  economics  who  told  the  Committee  on  Interstate  Com- 
merce of  the  United  States  Senate  that  “it  would  be  better 
if  we  had  less  transportation  in  the  aggregate,”  and  that  there 
ought,  in  adjusting  rates,  to  be  “more  regard  for  the  element 
of  distance.”  (Prof.  W.  Z.  Ripley,  Testimony,  Vol.  III.  pp. 
2327  and  2340.)  His  theory  of  social  progress  in  its  appli- 
cation to  railway  rates  is  further  indicated  by  the  following : 

“*  * * The  point  I am  trying  to  make  is  this : That 
there  are  influences  at  work  which  slowly  but  inevitably 
are  concentrating  our  population  in  the  large  cities,  and 
the  big  cities  have  nothing  of  which  to  complain. 
* * * We  should  not  unduly  extend  the  principle  of 
flat  rates  for  all  distances  until  we  have  an  invasion  by 
railroads  of  the  territory  of  other  railroads.” 

One  of  the  members  of  the  Interstate  Commerce  Commis- 
sion testified  in  similar  vein  (Vol.  IV.  p.  3298).  The  social 
theory  favored  by  Mr.  Commissioner  Prouty  has  been  sim- 
ply expressed.  Writing  in  The  Forum  for  April,  1899,  he 
said : 

“My  proposition  is  that  the  business  of  railway  trans- 
portation is  so  far  a function  of  Government  that  the 
United  States  is  bound  to  see  that  every  individual, 
every  industry,  every  locality,  no  matter  how  humble 
or  insignificant,  enjoys  the  advantages  to  which  he  or 


26 


PROPOSED  SOLUTIONS 


it  is  fairly  entitled,  and  that  he  or  it  is  not  crushed  out 
of  existence  by  the  exigencies  of  competition 

The  discriminating  will  not  find  it  possible  to  speak  of 
such  a conception  of  government  as  paternalistic-.  The  sug- 
gested coddling  of  incapacity  is  grandmotherly  and  with 
grandmother  in  her  dotage.  Unwillingness  to  be  crushed  out 
of  existence  by  the  exigencies  of  competition  gives  impulse 
to  all  industry  and  is  the  source  of  all  material  progress.  To 
relieve  the  slothful  and  inefficient  in  business  of  this  dread 
would  penalize  diligence  and  capacity  and  condemn  poster- 
ity to  drudgery  from  which  escape  through  the  continuance 
of  normal  progress  is  already  foreshadowed.  Yet  the  intro- 
duction of  any  considerations  other  than  those  of  commerce 
must  mean  that  the  natural  operation  of  the  forces  of  com- 
petition are  to  be  mitigated  either  for  the  benefit  of  some 
of  those  whom  it  would  cripple  or  destroy  or  for  the  further 
aggrandizement  of  some  of  those  to  whom  protection  is 
superfluous.  Commercial  considerations  can  only  be  applied 
by  commercial  means ; that  is,  by  the  free  action  and  inter- 
action of  the  natural  forces  of  trade  and  commerce ; a deputy- 
legislature  has  no  excuse  for  existence  unless  to  apply  po- 
litical considerations  to  the  performance  of  whatever  func- 
tions it  may  exercise. 

Results  of  Law-Made  Rates. 

What  would  be  the  difference  between  the  results  of  law- 


*The  italics  are  the  present  writer’s. 


RESULTS  OF  LAW-MADE  RATES 


27 


made  and  those  of  market-made  rates?  Here  is  this  great 
port  of  New  Orleans  with  its  magnificent  facilities  for  the 
transshipment  of  the  products  of  American  industry  and 
with  many  splendid  avenues  of  inland  commerce  leading  to 
its  gates.  Why  have  the  railways  called  upon  their  share- 
holders to  meet  the  tremendous  outlays  necessary  to  supply 
this  equipment  ? They  have  done  it  to  increase  the  commerce 
of  this  port  and  because  the  only  way  to  effect  that  increase 
was  to  carry  the  products  of  commerce  more  cheaply  and 
to  handle  them  more  cheaply  so  that  the  rates  to  the  Euro- 
pean markets  through  New  Orleans  might  be  as  low  or  a 
few  mills  lower  per  bushel  of  grain  or  per  100  pounds  of 
other  freight  than  those  through  the  North  Atlantic  seaports. 
To  save  these  few  mills  per  freight-unit  the  railroads  have 
spent  millions  on  track,  road-bed,  rolling  stock  and  terminals 
and  have  gladly  turned  over  to  the  shippers  the  whole  saving 
in  expense  which  those  expenditures  have  permitted.  Whether 
the  exports  through  New  Orleans  shall  increase  or  decline 
is  wholly  a question  of  the  adjustment  of  rates.  If  the  rate 
from  the  grain  fields  to  New  Orleans  is  enough  lower  than 
that  from  the  grain  fields  to  New  York  the  grain  is  handled 
in  the  elevators  of  this  port.  The  same  commercial  force 
which  is  operating  upon  your  railways  is  operating  upon  the 
railways  that  connect  the  grain  fields  with  each  port  from 
Halifax  to  Galveston.  Everywhere  an  incentive  to  economy, 
to  better  methods,  to  higher  efficiency,  to  lower  charges.  This 
is  why  the  average  freight  rate  in  America  is  now  but  7.80 


2 8 


PROPOSED  SOLUTIONS 


mills  per  ton  per  mile  and  barely  one-third  of  the  rate  of 
1870.  This  reduction  is  the  consequence  of  market-made 
railway  charges.  Let  us  turn  to  law-made  rates.  In  Eng- 
land, in  France,  in  Germany,  they  have  such  rates  and  in 
every  one  of  those  countries  the  efficiency  of  railways  is  far 
below  that  of  our  railways,  and  the  rates  are  far  higher  and 
the  decline  in  charges  is  relatively  sluggish.  Mr.  Acworth, 
the  great  English  authority,  says  that  the  legislation  in  that 
country  has  “taken  the  heart  out  of  the  railway  men”  and 
operated  to  the  disadvantage  of  the  general  public. 

We  may  expect  the  same  results  from  similar  laws.  Give 
the  agitators  their  deputy-legislature  and  I venture  to  pre- 
dict that  one  of  the  earliest  demands  for  law-made  rates  will 
be  for  the  purpose  of  controlling  the  competition  of  the  rail- 
way lines  reaching  the  ports  of  New  Orleans  and  Galveston. 
It  will  be  claimed  that  too  great  an  advantage  is  accorded  this 
port  and  that  the  relation  in  rates  which  has  recently  so  in- 
creased the  commerce  of  New  Orleans  ought  to  be  modified 
in  the  interest  of  Boston  and  New  York.  Those  of  us  who 
have  followed  the  various  differential  investigations  of  re- 
cent decades  know  that  this  really  means  that  those  ports 
wish  the  hand  of  the  law  to  step  in  and  save  them  from  the 
neccessity  of  reducing  their  port  charges.  What  chance,  in 
such  a contest,  would  New  Orleans  have  before  a deputy 
legislature  appointed  by  a Republican  president  and  con- 
stituted— (let  us  say)  like  the  present  one,  if  the  insidious 
force  of  sectional  politics  should  be  successfully  introduced. 


WOULD  THROTTLE  COMPETITION 


29 


Of  the  present  Commission  of  five  members  one  comes  from 
New  England,  one  from  New  York,  one  from  the  South, 
two  from  the  Mississippi  valley.  Of  the  three  who  make 
up  its  Republican  majority  two  are  from  New  York  and 
New  England,  one  from  Illinois.  I do  not  say  that  these 
gentlemen  have  been  moved  by  politics  or  sectional  interests 
but  I do  say  that  if  they  are  made  into  a deputy-legislature 
their  successors  soon  will  learn  to  act  as  partisans. 

Would  Throttle  Competition. 

There  sits  at  the  council  table  of  the  present  Commission 
a statesman  who,  a dozen  or  more  years  ago,  retired  from 
the  Federal  Congress  after  ten  years  of  distinguished  service 
because  he  would  not  yield  to  the  wave  of  populism  that  swept 
over  his  native  State.  His  service  upon  the  Commission  has 
been  longer  than  all  but  one  of  his  colleagues.  I do  not  wish 
to  misrepresent  him  by  an  omission  and  I will  say  that  he 
favors  a limited  reliance  upon  law-made  rates.  He  would 
have  a deputy-legislature  with  power  to  prescribe  maximum 
charges  leaving  the  railways  free  to  charge  less  if  they  chose 
but  would  not  give  it  power  to  fix  a minimum  or  an  absolute 
rate  or  to  name  a differential.  But  as  no  one  engaged  in 
commercial  transactions  wants  a law-made  maximum  rate 
except  for  the  purpose  of  controlling  a relation  between  the 
charge  for  the  service  to  which  it  applies  and  that  for  some 
other  service  his  words  apply  to  all  of  the  proposals  for  a 
rate-making  Commission.  In  a dissenting  opinion  written 


30 


PROPOSED  SOLUTIONS 


within  the  present  year  this  gentleman,  the  only  Southern 
member  of  the  Commission,  said  (In  the  matter  of  Differen- 
tial Freight  Rates  to  and  from  North  Atlantic  Ports,  n In- 
ter. Com.  Rep.  80-81)  : 

“*  * * the  facts  disclosed  do  not,  in  my  judgment, 
justify  the  conclusions  reached  for  the  reason  that  I be- 
lieve they  do  violence  to  the  great  principle  of  competi- 
tion which  the  Congress  and  the  Supreme  Court  have  so 
jealously  and  consistently  nourished  as  one  of  the  funda- 
mental rights  of  the  public.  In  declaring  as  between 
competing  lines  and  competing  ports  what  differentials 
shall  govern,  we  hamper  competition,  and  by  this  regu- 
lation of  distribution  effect  in  reality  a division  of  terri- 
tory, a division  of  traffic  and  a division  of  earnings, 
which  in  substance  and  effect  tend  to  defeat  not  only 
the  purposes  of  the  anti-trust  act  against  the  restraint 
of  trade,  but  the  pooling  provision  of  the  Interstate 
Commerce  Act,  with  the  enforcement  of  which  the  Com- 
mission is  charged  * * * May  competing  carriers  law- 
fully effect  through  the  agency  of  the  Commission  re- 
straint of  competition  and  trade  by  a division  of  traffic 
thing  through  an  agency  of  their  own  would  be  unlaw- 
between  themselves  and  the  ports  when  to  do  the  same 
f ul  ? I think  not. 

The  expectation  of  putting  these  questions  to  ulti- 
mate rest  could  only  spring  from  a Utopian  dream. 
Their  permanent  rest  is  perhaps  neither  practicable  in 
view  of  the  interests  of  the  ports  and  carriers  nor  de- 
sirable in  the  interest  of  the  public.  The  unmolested 
freedom  of  competition  by  lawful  methods  permitting 


WOULD  THROTTLE  COMPETITION 


31 


the  free  course  of  traffic  is  more  likely  to  give  to  each 
community  and  carrier  the  fair  and  just  rewards  of  its 
enterprise  and  public  spirit  and  just  rates  to  the  public 
than  any  devised  plan  of  fixed  differentials  between 
competing  carriers  to  compose  conflicting  interests  by 
apportionment  of  the  traffic  and  which  in  the  nature  of 
the  case  must  be  more  or  less  arbitrary.” 

It  would  be  difficult  to  improve  upon  the  foregoing.  Law- 
made  rates  are  sure  somewhere  to  deny  the  “fair  and  just 
rewards  of  enterprise  and  public  spirit,”  they  will  surely 
penalize  both  and  put  a premium  upon  political  wire-pulling 
and  intrigue.  The  spirit  of  the  English  Common  Law,  our 
noblest  inheritance  from  our  mother-country,  declares  that 
the  charges  of  railway  common  carriers  must  be  subject  to 
public  control  but  it  also  insists  that  the  courts  of  justice 
shall  be  open  to  the  weak  and  the  strong  alike  and  that  no- 
where else  shall  the  relative  rights  of  contesting  parties  be 
settled.  Let  the  Congress  fix  the  standards  of  obligation  as 
strictly  as  its  wisdom  suggests,  but  let  this  be  done  directly, 
not  through  an  irresponsible  deputy-legislature.  And  when 
the  standards  are  fixed  the  questions  whether  they  have  been 
violated  and  whether  extraordinary  protection  against  their 
future  violation  is  necessary  are  and  ought  to  be  for  the 
Federal  Courts. 

H.  T.  Nrwcomb. 

Washington,  D.  C. 

Bond  Building. 

December,  1905. 


